On March 1, the company paid rent for the month of March for $3,000.00 the entry will include:

Debit to Rent Expense for $3,000.00

Credit to Accounts Payable for $3,000.00

Debit to Cash For $3,000.00

Credit to Rent Expense for $3,000.00

Debit to Prepaid Rent for $3,000.00

On June 1, the company paid 2 years of insurance premiums worth $2,000.00 to Farmers' Insurance Co. The entry will include:

Debit to Cash for $2,000.00

Credit to Cash for $2,000.00

Debit to Insurance Expense for $2,000.00

Credit to Prepaid Insurance for $2,000.00

Debit to Prepaid Insurance for $1,000.00

When there is cash purchased of office supplies intended for sale by Office Max, the entry will require a debit to Office Supplies and a credit to Cash.

True

false

The merchandise inventory account is a long-term fixed asset that will be sold for a long period of time.

True

False

The entry to record the purchase of inventory items under the periodic inventory system will require a debit to the inventory account.

True

False

The use of Peachtree accounting offers difficulty in recording purchases of inventory items in volume.

True

False

The two methods of accounting for inventory are: perpetual and periodic inventory systems

True

False

When a company uses either perpetual or periodic inventory system, a physical count must also be conducted at the end of the period.

True

False

The terms 3/15, n/60 means that 3% discount will be applied within 60 days after the purchase date.

True

False

The terms FOB Shipping Point means that the seller pays for all the freight charges on the inventory items until they reach the buyer's warehouse.

True

False

The entry to record a purchase of an office equipment on account will include a credit to Accounts Payable.

True

False

When a buyer returns merchandise purchased, the entry on the buyer's books will include a debit to the Inventory account.

True

False

Table 1. On February 1, Company E purchased $9,500.00 worth of inventory on terms: 2/10, n/30, FOB Shipping Point on account from Company F. The Freight Charge is $200.00. On February 2, Company E returned $500 worth of merchandise purchased to Company F. The company uses perpetual inventory system.

Refer to Table 1, the entry on Company E's books to record the purchased of merchandise inventory on Feb. 1 will include:

Debit to Cash for $9,700

Credit to Inventory for $9,500

Debit to Inventory for $9,700

Credit to Accounts Payable for $9,500

Debit to Inventory for $9,500

Table 1. On February 1, Company E purchased $9,500.00 worth of inventory on terms: 2/10, n/30, FOB Shipping Point on account from Company F. The Freight Charge is $200.00. On February 2, Company E returned $500 worth of merchandise purchased to Company F. The company uses perpetual inventory system.

Refer to Table 1, the entry on Company E's books to record the return of merchandise inventory on Feb. 2 will include:

Debit to Accounts Payable for $500.00

Credit to Cash for $500.00

Debit to Inventory for $500.00

Credit to Accounts Payable for $500.00

Debit to Purchase Returns for $500.00